Subrogation is a concept that's well-known among insurance and legal firms but sometimes not by the customers who employ them. Even if you've never heard the word before, it is in your benefit to know the steps of how it works. The more you know, the better decisions you can make with regard to your insurance policy.
Every insurance policy you hold is a promise that, if something bad happens to you, the company on the other end of the policy will make good in one way or another without unreasonable delay. If your vehicle is hit, insurance adjusters (and the judicial system, when necessary) determine who was to blame and that person's insurance pays out.
But since ascertaining who is financially responsible for services or repairs is usually a heavily involved affair – and time spent waiting in some cases adds to the damage to the victim – insurance firms usually opt to pay up front and assign blame afterward. They then need a method to recover the costs if, when all is said and done, they weren't in charge of the expense.
For Example
Your garage catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays for the repairs. However, the insurance investigator finds out that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him responsible for the damages. You already have your money, but your insurance company is out $10,000. What does the company do next?
How Subrogation Works
This is where subrogation comes in. It is the way that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. Some companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Under ordinary circumstances, only you can sue for damages to your self or property. But under subrogation law, your insurer is considered to have some of your rights in exchange for making good on the damages. It can go after the money that was originally due to you, because it has covered the amount already.
How Does This Affect Individuals?
For one thing, if you have a deductible, it wasn't just your insurer who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its expenses by upping your premiums and call it a day. On the other hand, if it has a capable legal team and goes after them aggressively, it is doing you a favor as well as itself. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get $500 back, based on the laws in most states.
Moreover, if the total expense of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as disability attorney lake geneva wi, pursue subrogation and wins, it will recover your losses as well as its own.
All insurers are not created equal. When comparing, it's worth looking at the reputations of competing firms to evaluate whether they pursue winnable subrogation claims; if they do so in a reasonable amount of time; if they keep their accountholders posted as the case continues; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, on the other hand, an insurance agency has a record of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, you should keep looking.